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Photo by Brent Calver/Postmedia filesThe head of Canada’s largest bank hopes Ottawa can eventually strike a long-term deal with Washington, as United States president Donald Trump escalated the ongoing trade war between the two countries by announcing new tariffs and bans on certain Canadian products.Subscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.Subscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one account.Share your thoughts and join the conversation in the comments.Enjoy additional articles per month.Get email updates from your favourite authors.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one accountShare your thoughts and join the conversation in the commentsEnjoy additional articles per monthGet email updates from your favourite authorsSign In or Create an AccountorAs the trade war expands, more people will pull back their spending, borrow less and try to manage their expenses, Royal Bank of Canada chief executive David McKay said at the Scotiabank Financials Summit conference on Wednesday.“I am worried about the expansion of this, but it’s important that we get to a good long-term deal for Canada,” he said. “There’s enormous benefit on both sides of the border, and Americans are telling their congressmen the same thing, that this relationship is important to America, and it’s important to Canada.”SUBSCRIBER EXCLUSIVE: FP West: Energy Insider brings you behind the oilpatch’s closed doors with exclusive insights from insiders every Wednesday morning.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of FP West: Energy Insider will soon be in your inbox.We encountered an issue signing you up. Please try againTrump announced import bans and new tariffs on certain types of Canadian alcohol, dairy products, motorcycles and other kinds of products on Tuesday. The move is the latest step in an ongoing trade war between the two nations.Despite the uncertainty in the economy caused by the ongoing trade war, each of Canada’s biggest banks comfortably beat analysts’ third-quarter earnings expectations last month, primarily due to a bump in their capital market business segments.One reason why more capital is coming into Canada is the federal government’s desire to accelerate the growth of crucial energy-related projects, which would help Ottawa boost its economy and reduce the country’s reliance on the U.S. in the long run.To further encourage growth, RBC announced a $1.4-billion initiative to invest in Canadian technology companies that have the potential to become global powerhouses. The lender will look to make direct equity investments in Canadian companies.The banks also reported stable provisions for credit losses, which is the amount of money that lenders keep aside to tackle loans that may potentially go back, which means they’re generally confident about the near-term future.But McKay said there is significant uncertainty in a number of sectors that are impacted by the tariffs, so RBC is keeping its common equity tier 1 ratio, which measures how much capital banks have with respect to their risk-weighted assets such as loans, a little higher than regulators require.“I was hoping to say, ‘Yeah, I think we are at the peak and coming down (with regards to PCLs),’” he said. “I am a little cautious because of the escalation of the trade war right now. But what we’re seeing outside of that — consumer, commercial, U.S. commercial — is getting better.”Despite the additional product restrictions announced by the U.S., Bank of Nova Scotia chief executive Scott Thomson said only a relatively small amount of trade between the two countries is being tariffed.“I don’t think that’s going to have a huge impact on the credit performance, but, obviously, we will have to stay tuned for what transpires over the next year,” he said at the same conference.Another reason why Big Six CEOs are confident is because the Canadian consumers have been resilient so far despite the economic uncertainty.Toronto-Dominion Bank chief executive Raymon Chun said one group of clients he closely watches are those with credit scores below 650, which constitutes a very small percentage of TD’s book, but provides an indication of how Canadian consumers are doing.“We are definitely seeing some deterioration in that cohort,” he said at the conference. “But it’s within the range that we would have expected. Even in that more sensitive cohort, you are not seeing unusual behaviour. And this is why I am saying the resiliency of the Canadian consumer continues to play through at this point.”National Bank of Canada chief executive Laurent Ferreira said Ottawa’s sentiment shift towards growth is “fantastic” and should have a good impact on the Canadian economy in the next few years, but the U.S. trade dispute is spreading anxiety.“We cannot be in a trade war for too long,” he said at the conference. “It’s not good for investment. It’s not good conditions for the labour market as well.”Ferreira said he is concerned about the small businesses in Quebec, where the bank has a large presence, because a majority of them sell into the United States.“Even if you get through this, and we will get through this at some point, you don’t want to go through this again,” he said. “You are going to seriously think about reinventing yourself or selling your business. So, the concern is longer term, and this is not just Trump.” Join the Conversation This website uses cookies to personalize your content (including ads), and allows us to analyze our traffic. Read more about cookies here. By continuing to use our site, you agree to our Terms of Use and Privacy Policy.